EUR/JPY Fundamental Analysis – August 17, 2015 – Forecast

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Published: Aug 14, 2015, 04:54 UTC

Analysis and Recommendations: The EUR/JPY gained 3 points to 138.78 climbing as the euro gained momentum. GDP is on a steady upward trend in nominal

EUR/JPY Fundamental Analysis – August 17, 2015 – Forecast

Analysis and Recommendations:

The EUR/JPY gained 3 points to 138.78 climbing as the euro gained momentum. GDP is on a steady upward trend in nominal terms.

It was Japan’s chronic failure to grow in nominal terms over the past two decades that set it apart from other developed countries. Core consumer prices and the GDP deflator, another measure of inflation, have both started rising. And although the news on wages in June was disappointing—a 2.9% fall in real terms—they should soon rise as the labour market continues to tighten. Nechako Baba of Goldman Sachs, a notable bear on Abenomics, expects real wage growth of 0.2-0.3% in the current fiscal year.

Among the clearest casualties of China’s devaluation is the Bank of Japan. The chances were never high that Governor Haruhiko Kuroda was going to be able to unwind his institution’s aggressive monetary experiment anytime soon. But the odds are now lower than even skeptics would have previously believed.

The real question, though, is what China’s move means more broadly for Abenomics. A sharply devalued yen, after all, is the core of Prime Minister Shinzo Abe’s gambit to end Japan’s 25-year funk. Abenomics is said to have three parts, but monetary easing has really been the only one. Fiscal-expansion was neutered by last year’s sales-tax hike, while structural reform has arrived only in a brief flurry, not the avalanche needed to enliven aging Japan and get companies to raise wages.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Today’s economic releases:

Cur.	Event	Actual	Forecast	Previous
NZD	Core Retail Sales (QoQ)	0.1%	0.7%	2.5%
NZD	Retail Sales (QoQ) (Q2)	0.1%	0.5%	2.3%
AUD	RBA Assist Gov Kent Speaks

Upcoming Economic Events that you should be monitoring:

Monday, August 17, 2015

Cur.	Event	Actual	Forecast	Previous
JPY	GDP (QoQ) (Q2)		-0.5%	1.0%
JPY	GDP (YoY) (Q2)		-1.9%	3.9%
EUR	Trade Balance (Jun)			18.8B
USD	NY Empire State Manufacturing Index		5.00	3.86
CAD	Foreign Securities Purchases (Jun)			-5.45B